US automakers rev up campaign against steel duties

At heart is the question, what are ‘unfair’ pricing practices? And what are reasonable counter measures.

From the perspective of a metal stamper, the current situation is that, for certain materials, my customers can buy finished parts for less than my raw material cost. So keeping the tarrifs in place means that people buy the finished part offshore, bypassing both the steel production that the steel companies claim they care about and the downstream jobs and value added. This is the distorting effect of tarrifs … my competition has lower input costs than I do.

Yahoo! NewsSix of the world’s biggest carmakers backed a cross-party drive by US senators to scrap controversial duties on a type of steel used extensively in the auto industry.

DaimlerChrysler, Ford, General Motors, Honda, Nissan and Toyota all endorsed a letter sent to the ITC from 10 US Republican and Democratic senators, who argued the steel industry had changed dramatically since 1993.

“In fact, the assets of the 14 US companies that produced corrosion-resistant steel in 2000 are now owned by only six companies, and the market is dominated by just three,” the senators’ letter said.

“Since the steel industry is now prospering, restrictions should be lifted to restore the competition to the marketplace,” it added.

“Failure to do so would threaten the sector of the US economy that uses this same product as a raw material, namely the automotive industry.”

In a joint statement, the automakers said they bought the “overwhelming amount” of the steel used in their US operations from American mills.

But noting that the US car industry employs 2.4 million people, the companies said they “must maintain the ability to obtain key materials for their vehicle assembly plants dependably and at globally competitive prices”.

US steelmakers and unions have banded together to take out full-page newspaper advertisements demanding that the ITC renew the duties. “Don’t let America’s steelworkers get run over by the auto companies,” the ad says.

The ad quoted a Commerce Department report that said if the duties were lifted, foreign corrosion-resistant steel would flood the US market at up to 36 percent below the fair market price.

But critics including the automakers accuse the steel industry of using wildly distorted figures that are based on the import pattern of the early 1990s.

And since then, the massive growth of countries like China means that global demand for steel has rocketed to ensure double-digit earnings growth for US steelmakers, the critics note.